Merrimack Pharmaceuticals Inc (NASDAQ:MACK) may be the perfect biotech company for your speculative portfolio. The company had its Initial Public Offering in March of 2012 and raised $100 million for its operations. The sale of the public offering was at $7 dollars a share, valuing the company at $647 million. Merrimack Pharmaceuticals Inc (NASDAQ:MACK) seems to have come to market at the right time, as it currently has eight drugs in it's portfolio to bring long term value for investors. The price of Merrimack Pharmaceuticals Inc (NASDAQ:MACK) has been stagnant since its initial public offering as investors await for results from its late stage cancer trials.
Biotech stocks that are at an early stage have a lot of trouble with raising capital and obtaining funding for trials. Merrimack Pharmaceuticals Inc (NASDAQ:MACK) is in a good spot as it already has two partnerships for it's drug portfolio. MM-121 is one of these compounds--it is a monoclonal antibody that targets the ERbB3 cell surface receptor, and is partnered with Sanofi SA (ADR) (NYSE:SNY) for multiple cancer indications like ovarian cancer, breast cancer, and NSCLC cancer. MM-398 is the lead candidate for Merrimack as it is in a phase three trial for metastatic pancreatic cancer for patients who had previously failed treatment with Gemcitabine. It is partnered with Pharmengine, who hold rights in Taiwan for the drug. The best part about Merrimack's MM-398 is that the FDA has granted it an orphan drug designation.
Pancreatic Cancer Market
To this day pancreatic cancer is one of the hardest forms of cancer to treat. The five year survival rate for people living with the disease is around 4% and the current therapies are toxic. The current therapies for pancreatic cancer aren't extending the life of patients for long and more drugs are needed for this indication. If Merrimack Pharmaceuticals Inc (NASDAQ:MACK) is successful in their phase three trial for MM-398 the company would have a huge market opportunity, as the pancreatic cancer market is set to be worth about $1.2 billion dollars by the year 2015.
Merrimack faces some competition in the pancreatic cancer space. Two competing companies are Celgene Corporation (NASDAQ:CELG) and Threshold Pharmaceuticals, Inc. (NASDAQ:THLD). Celgene announced in January of 2013 that patients who took the company's drug Abraxane with Gemcitabine lived for 8.5 months longer, compared to those who took Gemcitabine alone and survived only 6.7 months. That's a life extension of 1.8 months of patients who took Abraxane, which is better than standard care alone. Threshold has a drug that is currently in a phase 3 trial for pancreatic cancer, but in it's phase 2 trial it reported a better life extension than Celgene's Abraxane. Threshold reported a life extension of 9.2 months for patients treated with TH-302 compared to Gemcitabine alone at 6.7 months. Obviously Merrimack will have some competition in this space, but the company's success or failure all depends on what they finally report in their phase three result of MM-398.
Merrimack Pharmaceuticals Inc (NASDAQ:MACK) has an array of cancer drugs in its pipeline that could bring lots of value for long term investors. It has been able to provide an initial public offering to provide adequate funding for their late stage trials and other administrative expenses. The pancreatic cancer market will grow to $1.2 billion dollars in 2015 and that could bring a huge opportunity for long term investors in Merrimack Pharmaceuticals Inc (NASDAQ:MACK). If all goes well with MM-398 then the company's valuation will be reevaluated to be higher because of the market potential for the drug. Investors should be aware of the fact that pancreatic cancer is the hardest form of cancer to treat, so the chances that the results will be outstanding will be small, but patience is needed in this biotech name.
The article Merrimack May Be Right For Your Portfolio originally appeared on Fool.com and is written by Terry Chrisomalis.
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